Council Post: Lessons From Pandemic Small-Business Relief Programs

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Jeanette Quick is Gusto’s Head of Compliance and Public Policy.

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As we move closer to the end of the pandemic, government relief funds have expired or been exhausted. However, small businesses are struggling to recover from over two years of disruptions caused by Covid-19.

In fact, Gusto’s data shows small-business payroll reserves in hard-hit industries are tighter now than they were during the height of early pandemic lockdowns. Since the start of 2022, 26% of businesses—primarily in the personal services sector—have less than one month of payroll in reserves. That’s up from 21% this time last year and 23% in March 2020. That number dropped to around 10% as companies started to receive Paycheck Protection Program loans and other funds. Without the aid that helped those businesses weather the early disruption of the pandemic, small businesses have fewer resources to recover.

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Small Businesses Continue To Face New Challenges

Small businesses are being barraged with new challenges, with owners reporting that labor shortages, supply chain constraints and inflationary pressures are all impacting revenue. The recent omicron surge has impacted many small businesses, with a majority of businesses noting that the variant impacted their operations. Over 61 million Americans work in small businesses, and millions of additional jobs could be lost and businesses shuttered without sensible reforms and extensions of current emergency programs to protect against future shocks.

The Federal Government’s response to the pandemic was unprecedented, and almost the $3.6 trillion spent on aid invariably kept millions of small businesses from closing through programs such as Paycheck Protection Program, Economic Injury Disaster Loans and the Employee Retention Tax Credit. However, access was not equal to these programs leaving many women- and minority-owned businesses out due to lack of relationships with traditional financial institutions and overly complex and changing guidance leaving many small-business owners confused about how and what type of aid they qualified for.

The Private Sector Can Help

In response to this confusion, Gusto founded and chairs the Small Business Relief Council (SBRC), a cross-industry coalition of over 80 companies representing millions of small businesses that developed to enable small businesses to survive and thrive during the pandemic. Gusto leads the consortium, bringing lenders, fintech, payroll providers and accountants together to collaborate on regulatory, operational and risk issues. Gusto’s experience leading SBRC has given us a holistic perspective of challenges that minority- and women-owned businesses have faced during the pandemic.

Financial Leaders Can Work With Government Leaders

Most small-business owners lack the resources and technical knowledge to fully take advantage of lending products and tax benefits, needing to rely on financial advisors, accountants and companies like Gusto to navigate a complex system. As an industry, we can learn from the rollout of the pandemic aid programs and work with the Government to ensure emergency assistance programs are in place and that they are accessible to underserved businesses to protect against future crises.

Financial industry leaders can accomplish this by calling on Congress to permanently extend the Employee Retention Tax Credit and Economic Injury Disaster Loan programs.

Unfortunately, the uptake of the ERTC was low due to changing guidance and confusion about who was eligible. In addition, Congress retroactively ended the program effective October 1, 2022, despite the benefits of the program and before the country entered into the winter omicron Covid-19 case surge. The ERTC is designed to aid small businesses for loss in gross receipts or suspended operations due to externalities, and making ERTC permanent can protect against future shocks, such as natural disasters and a future pandemic.

The Economic Injury Disaster Loan program was hugely successful in providing working capital to businesses impacted by Covid-19, but the program isn’t authorized to take new applications after January 1, 2022. Small Business Administration made substantial changes to the program in October of 2021, such as increasing the maximum loan amount from $500,000 to $2,000,000; however, there was little time for businesses to respond and apply before the program expired. As with making the ERTC permanent, reauthorizing EIDL will protect small businesses from unanticipated disruptions to their business operations.

Lastly, leaders in the financial industry that serve small businesses can work with federal agencies to ensure that guidance and eligibility criteria for economic assistance programs are clear, and they can partner with organizations such as women’s business centers and local chambers of commerce so we can reach every underserved business owner. If finance leaders can accomplish this, then in the next moment of need, we all can respond with alacrity to ensure small businesses get the resources they need to survive and thrive.


Forbes Finance Council is an invitation-only organization for executives in successful accounting, financial planning and wealth management firms. Do I qualify?


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